NEWS,27. AND 28.02.2013

News of the Day From Across the Globe

1 Premier ousted: Slovenia's Parliament ousted Prime Minister Janez Jansa and his conservative government Wednesday, designating a financial expert from the opposition to try to form a new administration. The moves come amid corruption allegations against Jansa and growing public anger over the struggling economy and austerity measures that have seen living standards fall and unemployment rise. The 55-33 no-confidence vote named Alenka Bratusek as prime minister-designate. Bratusek, 42, would be the first woman to lead Slovenia's government since its secession from Yugoslavia in 1991.

2 Iraq warning: Iraqi Prime Minister Nouri al-Maliki warned Wednesday that a victory for rebels in the Syrian civil war would create a new extremist haven and destabilize the wider Middle East, sparking sectarian wars in his own country and in Lebanon. The prime minister's remarks reflect fears by many Shiite Muslims in Iraq and elsewhere that Sunni Muslims would come to dominate Syria should President Bashar Assad be toppled. 

3 Corruption case: Vassilis Papageorgopoulos, the former mayor of Greece's second city, Thessaloniki, and two of his top aides were sentenced to life in jail Wednesday after being found guilty of embezzling almost $23.5 million in state funds. It's a rare conviction in a country where political corruption has contributed to Greece's dysfunction and economic decline.

4 Swiss shooting: A longtime employee opened fire at a wood-processing company in central Switzerland on Wednesday, leaving three people dead, including the assailant, in the country's second multiple-fatality shooting in two months, police said. Seven other people were wounded, six of them seriously, in the shooting at the premises of the company Kronospan, in the small town of Menznau. The incident occurred as the Swiss Parliament prepares to consider tightening some aspects of the country's famously lax gun legislation.

5 Shark attack: About 150 friends and family of 46-year-old Adam Strange wrote messages to him in the sand and stepped into the water Thursday at a New Zealand beach to say goodbye after he was killed Wednesday by a large shark. Strange, an award-winning television and short film director, was swimming near popular Muriwai Beach Wednesday when he was attacked by a shark that may have been 14 feet long. The fatal attack is one of only about a dozen in New Zealand in the past 180 years.

6 Lethal fire: A fire broke out at an illegal six-story plastics market in the Indian city of Kolkata on Wednesday, killing at least 19 people, police said. The blaze was likely caused by a short circuit, police said.

7 Lion gangster: Authorities have removed four lions and two bears from the Bucharest estate of a notorious Romanian gangster. Ian Balint, who reportedly used the animals to threaten his victims, was arrested Feb. 22 with dozens of others on charges of attempted murder, kidnapping, blackmail and possessing illegal weapons. Environmental authorities tranquilized the animals Wednesday and transported them to a zoo.

8 Tallest hotel: The JW Marriott's Marquis Dubai formally opened this week after gaining the title of tallest hotel from Guinness World Records. At 1,099 feet, the 72-story hotel towers over the skylines of most cities.

 

US economy shows strength

 

Even with automatic spending cuts looming, the outlook for the US economy brightened a bit Tuesday after reports showed that Americans are more confident and are buying more new homes.Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand the deep government cuts that will kick in Friday.That's especially encouraging because uncertainty over the federal budget could persist for months."The stars are lining up for stronger private sector growth this year," said Craig Alexander, chief economist at TD Bank.Sales of new homes jumped nearly 16% in January to their highest level in 4 years, adding momentum to the housing recovery. Consumer confidence rose in February after three months of declines. And home prices increased in December from the same month in 2011 by the largest amount in more than six years.The upbeat economic news contributed to a rally on Wall Street. The Dow Jones industrial average jumped more than 100 points.Consumers still face numerous burdens. Among them is a sharp increase in gas prices. The national average for a gallon, $3.78 ($1 a litre), has surged 44 cents in a month.And Social Security taxes rose 2 percentage points beginning January 1. This year, the increase will cost a typical household that earns $50 000 about $1 000. Income taxes for the highest-earning Americans also rose.Both factors could reduce overall spending.On Friday, about $85 billion in automatic spending cuts are to kick in, and there's little sign that the White House and Congress will reach a budget deal to avoid them. The cuts will cause furloughs and temporary layoffs of government workers and contractors and sharply reduce spending on defense and domestic programs.For about 2 million long-term unemployed, benefits now averaging $300 a week could shrink by about $30. Payments that subsidize clean energy, school construction and state and local public works projects could be cut. Low-income Americans seeking heating or housing aid might face longer waits.Overall, the tax increases and spending cuts could shave up to 1.2 percentage points from growth this year, economists estimate. Alexander estimates that without the spending cuts or tax increases, the economy would expand more than 3 percent this year. Instead, he predicts growth of only 2%.But growth should accelerate later this year as the effects of the government cutbacks ease, he and other economists say. And several reports on Tuesday suggest that the economy's underlying health is improving despite the prospect of lower government spending and further budget stalemates:

• The Standard & Poor's/Case-Shiller 20-city home price index rose 6.8% in December from a year earlier. That was the biggest year-over-year increase since July 2006. Rising home prices tend to make homeowners feel wealthier and encourage more spending. They also cause more people to buy before prices rise further. And banks are more likely to provide mortgages if they foresee higher home prices.

• Consumer confidence rose after three months of declines, according to the Conference Board, a business research group. Confidence had plunged in January after higher taxes cut most Americans' take-home pay. The rebound, though, suggests that some consumers have begun to adjust to smaller paychecks. The consumer confidence index rose to 69.6 in February from 58.4 in January. That's higher than last year's average of 67.1.

• Bank lending rose 1.7% in the October-December quarter, the Federal Deposit Insurance said. It was the sixth rise in seven quarters. Banks made more commercial and industrial loans to businesses and auto loans to consumers. More lending means the Federal Reserve's policy of keeping interest rates at record lows will benefit more people. Chairman Ben Bernanke reiterated to Congress on Tuesday that the Fed's efforts are helping the economy and signaled that they will continue.

• Sales of new homes rose to a seasonally adjusted annual rate of 437 000, the Commerce Department said. That's the highest level since July 2008. The gain will likely encourage more construction. Higher sales are keeping the supply of new homes low, even as builders have tried to keep up. At the current sales pace, it would take only 4.1 months to exhaust the supply of new homes for sale. That's the lowest such figure in nearly eight years.

"Builders are not putting up homes fast enough to meet underlying demand," said Patrick Newport, an economist at IHS Global Insight.New homes have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90 000 in tax revenue, according to data from the National Association of Homebuilders.Construction hiring has picked up in recent months. The industry has gained 98,000 jobs since September, its best stretch since the spring of 2006 - before the housing bubble burst.

Will Italian Politics Be a Threat for International Financial Stability?

Mr. Grillo and the Five Star movement is part of a trend across the developed world, as electorates become disenchanted with established parties and vote for a protest party. From Occupy Wall Street to the Tea Party to the EU's Pirate Party, an increasing number of transatlantic voters tire of the options presented by established two party systems. This may be driven by the failure of governing parties to adapt to societal tensions raised by the current economic crisis. In that light, the strong protest vote in Italy should not be seen as an outlier.Despite the current uncertainty in the composition of the next government, Italy remains an important ally for the United States, and a key strategic partner in all future discussions about Europe and transatlantic relations. For this reasons America should follow carefully what happens in Italy. The demand for renewal and change that is the real message of recent elections is something too important to be considered just a local case. Understanding the political process of how Italian governments are formed is therefore key.On February 25th the results of the political elections in Italy stunned all commentators by presenting a country apparently deeply divided and a parliament that seems not to allow any reasonably stable coalition for leading the country.The polls gave a limited majority to the leftwing coalition (29.5% in the lower house) leading on Silvio Berlusconi's rightwing coalition (29.1%). But the surprise was the significant result of the "Five Stars movement" of Mr Beppe Grillo (25.5%) and the relatively low result achieved by current Prime Minister Mario Monti (10.5%).The new electoral law (approved late in 2012, just few months ahead of the elections), allows the left to gain a solid majority in the lower house (with 55% of the legislature, although they led the right-wing coalition by only 0.4% of the vote), but in the upper house, there is an apparent stalemate, as the left elected 123 senators, the right 117, Five Stars 54 and Monti 18. A coalition government must include two of the first three parties mentioned, as a government requires a majority in both houses.The problem is that, at the moment, there is not much appetite for an agreement. The left-wing coalition does not seem interested in a deal with Berlusconi and the Five Stars leader, Mr Beppe Grillo, suggested that he would not make any deal with anyone at all. It now appears that Mr Bersani would like to open a bridge to Mr Grillo rather than trying a grand coalition with Mr Berlusconi. It is unclear if he will succeed, but in any case it will be hard to imagine that Italy will have a strong government in this situation.As the new parliament assumes office on March 15th, there is time for negotiations and compromise. But in the meantime, talks need to be held also in order to designate the new leadership of the lower house and Senate and its constituent committees and to elect the new president of the Republic, as the incumbent's mandate is expiring in May.Who will govern Italy in the meantime? Currently, there is still a caretaker government in office, which is the existing cabinet of Prime Minister Monti. It is nevertheless expected that after the new parliament is fully operational, the president of the republic, Mr Giorgio Napolitano, will try to facilitate the forming of a government and is likely to give a mandate to a designate Prime Minister. As Bersani's leftwing coalition has the majority in the lower house, unless the coalition otherwise indicates, Bersani remains the likely next Prime Minister. But with no agreements for a majority, he will be rather unlikely to succeed.The Italian system is a parliamentary democracy, and the new government, that formally takes office at the moment the ministers are sworn in, needs to win a vote of confidence from both houses of the parliament immediately after taking office. In the past, the tradition has been that, if the designated Prime Minister, after having made his consultations, realizes that there is no support for his government, he will indicate so to the President and resign his post. That meant that the previous government remained as caretaker until a new Prime Minister was selected and then formed the government, or, if no solution was available, the president of the republic called for new elections and dissolved the government.Currently, Monti stays in office as Prime Minister until an alternative is selected, and the need for stability would suggest that until a solution is found the best is for him to stay. However, things are so uncertain, no one can predict when or if a new government would be formed.

Wall Street gains despite IMF warning

Wall Street advanced, with gains tempered by expectations that Congress will not act to stop automatic federal spending cuts that are widely expected to put the brakes on the pace of expansion in the world's largest economy.The International Monetary Fund warned it will downgrade its economic forecast for the US if US$85 billion of schedule federal spending cuts take effect on March 1.If all cuts go ahead, the IMF would lower its current estimate for a 2% expansion for US gross domestic product this year by at least 0.5%, IMF spokesman William Murray told reporters at a news briefing. Global growth also would be hit.In afternoon trading in New York, the Dow Jones Industrial Average rose 0.14%, the Standard & Poor's 500 Index gained 0.18%, while the Nasdaq Composite Index climbed 0.37%.Expectations of a slowdown in the pace of growth buoyed US Treasuries.Commerce Department data released today showed GDP expanded at an annual rate of 0.1% in the final three months of 2012, compared with a previously estimated 0.1% contraction. That was below the 0.5% growth forecast by economists polled by Reuters."It's pretty well baked into the cake that no action is likely to be taken on the sequestration tomorrow," Thomas Simons, a government debt economist in New York at Jefferies Group, one of 21 primary dealers that trade with the Fed, told Bloomberg. "GDP was weaker than expected. It's nice to see the negative sign go away, but it's still pretty weak."The negative sentiment was offset by the latest news on the labour market. Applications for jobless benefits surprisingly dropped 22,000 last week to 344,000. Economists polled by Reuters had expected first-time applications to fall to 360,000.Shares of JC Penney sank, last down 14%, after the company reported a net loss of US$552 million in the quarter ended February 2, compared with US$87 million a year earlier.In Europe, the Stoxx 600 Index finished the day with a 1% gain from the previous close. The index has advanced for the ninth straight month and is up 3.7% so far this year, according to Bloomberg.Good news on Europe's largest economy helped as German unemployment posted a surprise drop February.Benchmark stock indexes rose in Frankfurt and Paris, both advancing 0.6%, while the UK's FTSE 100 added 0.6%.The political impasse in Italy remains a concern for all of Europe. In Berlin, Italian President Giorgio Napolitano said the formation of a new government would take time and that it's important to keep in mind that the Monti government remains in office for now.

NEWS,26.02.2013

US consumer confidence rebounds

Americans' confidence in the economy rebounded in February, reversing three straight months of declines as shoppers began adjusting to a payroll tax hike last month. The New York-based Conference Board says on Tuesday that its Consumer Confidence Index stands at 69.6, up from a revised 58.4 in January. Economists had expected 60.5, according to research firm FactSet.It was the highest reading since November's 71.5. Confidence has fallen since then as shoppers were worried about growing economic uncertainty.The consumer confidence indicator is watched closely because consumer spending accounts for 70% of US economic activity. The figure is still well below the 90 reading that indicates a healthy economy.

Denmark to cut corporate taxes

Denmark's government on Tuesday presented a controversial growth package that would reduce corporate taxes and increase public spending to spur growth and create 150 000 jobs. The centre-left coalition plan calls for a progressive reduction in corporate taxes from the current 25% to 22%, as well as an increase in public investment of six billion kroner (€804m or $1.05bn) to stimulate the economy."We are creating jobs now, but we are also getting Denmark ready to grab the economic recovery when the internal slump turns," Social Democratic Prime Minister Helle Thorning-Schmidt told a news conference, adding that while there were no quick fixes, the growth plan was a "step in the right direction."At the same time, Economy Minister Margrethe Vestager said no new taxes would be imposed on businesses."We are sending a clear signal to companies that we do not plan any new taxes and duties for businesses … This is not just a growth package, it is a complete growth plan towards 2020," she said.The corporate tax reduction would however not include a decrease in the tax on labour costs in the financial sector, nor would it apply to North Sea oil extraction.The proposal also calls for lower energy duties for companies, an increase in planned public sector investment and a reintroduction of tax rebates for Danes who make home improvements.While Danish industry was positive, the unions were not, with eight unions having written an open letter to the prime minister complaining that reduced corporate tax would be at the expense of public investment.The move came one week after a proposal to overhaul the student grant system, and a social security reform that would force all unemployed under-30's to pursue an education rather than live off social security.All three government proposals must now be negotiated with other parliamentary parties in order to win a majority.Although the left-wing Red Greens are expected to vote against the government's proposals, centre-right parties are expected to approve them.

US pushes trans-Atlantic free trade

US Secretary of State John Kerry pushed on Tuesday for a free-trade agreement between the United States and Europe, saying it is a priority for President Barack Obama's second term that would help create jobs and growth on both sides of the Atlantic.The proposal has been garnering support on both continents, with Obama saying earlier this month that the US believes "trade that is free and fair across the Atlantic supports millions of good-paying American jobs."Speaking after talks on Tuesday with Chancellor Angela Merkel and Foreign Minister Guido Westerwelle, Kerry said such an agreement would be a boon to the US and Europe."We think this is something that can help lift the economy of Europe, strengthen our economy, create jobs for Americans, for Germans for all Europeans, and create one of the largest allied markets in the world," he told reporters alongside Merkel. "It will help raise standards, it will help break down barriers, and we believe it is good for all of us."Germany, Europe's largest economy, has strongly supported the idea and Westerwelle said that he hoped the groundwork could be done quicikly to begin negotiations with the U.S. on the agreement by the summer."We see here a window of opportunity," Westerwelle said after his one-on-one meeting with Kerry. "It's a window of opportunity that we need to seize in the interest of growth, and jobs for Germany, the United States and Europe."Still, negotiations may not be easy or short, with agriculture likely to be one tricky area.Kerry's swing through Berlin was his second stop on a nine-country dash through Europe and the Middle East, Kerry's first trip as secretary of state.He started his trip in Britain and heads next to France.

N Korea leader monitors 'actual war' drill

North Korean leader Kim Jong-Un oversaw a live-fire artillery drill aimed at simulating an "actual war", state media said on Tuesday, a day after South Korea swore in its first female president."An endless barrage of shells were fired by artillery pieces on 'enemy positions', their roar rocking heaven and earth, and all of them were enveloped in flames," the Korean Central News Agency (KCNA) said."Feasting his eyes at the 'enemy positions' in flames, [Kim] was satisfied," the official agency added.KCNA gave no precise time or location for the drill, but its announcement followed Monday's presidential inauguration in the South, at which new leader Park Geun-Hye signalled a zero-tolerance policy to North Korea provocation.According to KCNA, Kim ordered the live fire exercise to test the capability of artillery units "to fight an actual war".It marked the latest in a series of high-profile military inspections by Kim following the North's nuclear test earlier this month.Last week Kim oversaw an air force demonstration, a paratroop drill and a separate tactical attack exercise combined with live shell firing.In her inauguration speech, Park demanded that Pyongyang "abandon its nuclear ambitions" immediately and warned that the North's test was a challenge to the future survival of the Korean people.While promising to pursue the trust-building policy with Pyongyang that she had promised in her campaign, Park stressed she would never compromise South Korea's national security.Cross-border tension has been high since the North's 12 February test which sparked global fury and condemnation from the UN Security Council.Pyongyang said the test was a response to a tightening of sanctions after the North's successful long-range rocket launch in December, which the international community condemned as a disguised ballistic missile test.

Tepid response over Castro retirement

Cuban-Americans in Miami are reacting with a collective shrug over the news that Raul Castro plans to retire from Cuba's presidency within five years.Many believe Castro's departure and the ascendance of Miguel Diaz-Canel won't bring change.Exiles such as 74-year-old Alberto Faustino have been waiting years for the Castro brothers to leave or be forced out. Fidel Castro handed power to his brother after falling ill in 2006. Raul Castro said on Sunday that his new presidential term would be his last.Diaz-Canel has been tapped to be Raul Castro's top lieutenant and possible successor.Faustino and other Cuban-Americans said the absence of free elections and continuation of rule by the Communist Party mean there will be little to celebrate when Castro is gone.Meanwhile, AFP reported that Venezuelan President Hugo Chavez, who is convalescing in a Caracas hospital, issued a statement on Monday congratulating President Castro for his re-election to a final five-year term.Chavez sent his "warmest congratulations to the revolutionary leader Raul Castro" and wished him "great success" after the National Assembly re-elected him on Sunday.The Venezuelan leftist leader has forged close ties with Cuba's the retired Fidel and his brother Raul. Chavez has undergone four rounds of cancer surgery in Cuba since June 2011.Chavez returned to Caracas on 18 February after spending two months in a Cuban hospital following his latest surgery in Havana.The Venezuelan government has issued sporadic statements since Chavez's 11 December operation and his face has only been seen in four pictures released on 15 February, showing him in bed, smiling with his two daughters.

NEWS,25.02.2013

Obama: Time to start governing

US President Barack Obama warned warring politicians on Monday it was time to start governing as Washington headed into another manufactured crisis threatening the fragile economy. Obama told an annual meeting of state governors at the White House that huge budget cuts due to hit on 1 March would "slow our economy, eliminate good jobs" and leave Americans with "thinly stretched" budgets wondering what to do.The president is demanding that congressional Republicans stave off a set of arbitrary, automatic spending cuts known as the sequester by closing tax loopholes that benefit the rich and corporations."We can't just cut our way to prosperity. Cutting alone is not an economic policy," Obama told Democratic and Republican governors in the State Dining Room of the White House.Many Republicans agree that the sequester, which imposes across the board cuts of $85bn this year from government programme, is a bad way to cut spending and reduce the deficit.But they argue that Obama is not serious about reining in spending and warn the president that his success in getting higher income tax rates on the rich late last year is the last time they will permit him to raise more revenue.Obama, who no longer has to worry about answering to voters, warned Washington had to "get past its obsession with focusing on the next election instead of the next generation”."All of us are concerned about our politics, both in our own party as well as the other party. But at some point we've got to do some governing."What we can't do is keep careening from manufactured crisis to manufactured crisis. "The American people have worked hard and long to dig themselves out of one crisis. They don't need us creating another one."

World powers have 'good offer' for Iran

World powers will present Iran with an updated and "good" offer at talks this week on its nuclear programme, an EU official said on Monday, although hopes for a breakthrough were slim. Talks aimed at curbing Tehran’s nuclear drive start in Kazakhstan on Tuesday, with the so-called 5+1 world powers represented by the EU sitting down with an Iranian team led by its top nuclear negotiator Saeed Jalili."We have prepared a good and updated offer for the talks, which we believe is balanced and a fair basis for constructive talks," said the spokesperson for EU foreign policy chief Catherine Ashton."The offer addresses international concerns... on the nature of the Iranian nuclear programme, but is also responsive to Iranian ideas," said the spokesperson, Michael Mann."We hope that Iran will seize this opportunity and come to the talks with flexibility and commitment to make concrete progress towards a confidence-building step."A source close to the negotiations said the offer would still insist that Iran halts enriching uranium to 20%, shuts down its controversial Fordo uranium enrichment plant and sends abroad all uranium already enriched to 20%."This still forms the basis of the demands of the 5+1 group," said the source who asked not to be identified.Reports have said that Iran could in return be offered a softening of sanctions imposed against it, possibly starting with a lifting of measures against its gold industry.However, Jalili said at the weekend that Tehran would not go beyond its obligations or accept anything outside its rights under the non-proliferation treaty (NPT)."We don't expect any breakthrough. The Iranians have made different declarations in the last days. It depends if you take the positive or the negative ones," said one Western official who asked not to be identified.The 5+1 world powers are Britain, China, France, Germany, Russia and the US.

China manufacturing growth falls

China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said Monday, noting that the world's second-biggest economy was still recovering slowly.The bank's seasonally adjusted preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, it said in a statement.A reading above 50 indicates expansion and it was the fourth consecutive month of growth, after 12 months of contraction."The Chinese economy is still on track for a gradual recovery," Qu Hongbin, a Hong Kong-based economist with HSBC, said in the statement, downplaying the fall in PMI."The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," he added.Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan ($171.7bn) worth of new loans, official data showed earlier this month, as Beijing seeks to boost economic growth.The domestic economy expanded at 7.8% last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets.Policymakers cut interest rates twice in 2012 and have trimmed the amount of cash banks must place in reserve three times since December 2011 to encourage lending and pump up growth.The PMI figure, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of China's economy.Liao Qun, a Hong Kong-based economist with Citic Bank International, said weaker manufacturing activity in February may have suggested the domestic rebound was unstable, but the overall recovery trend remained intact."The figure, after being seasonally adjusted, might indicate a weaker economic rebound in February due to the uncertainty in overseas economies and a lack of clarity in China's fiscal and monetary policies ahead of the two sessions," Liao said.The "two sessions" is a Chinese reference to the annual meetings of the country's top legislative and political advisory bodies in March, which will set the tone for the country's economic policies."Given the HSBC PMI index is just preliminary, we'll have to wait for the official PMI to gauge the momentum of China's growth recovery," Liao added. The official PMI, released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on a monthly basis, focuses more on large and medium companies, while the HSBC PMI covers mostly small firms.

China communists lament spoiled generation

The mouthpiece of China's ruling Communist Party on Monday lamented a generation who had never tasted "hard work" after the son of a general was detained on suspicion of involvement in a gang rape.Li Guanfeng, the teenage son of general Li Shuangjiang - a popular military singer and household name in the country - was held last Thursday in the latest allegation against privileged children of officials to spark public outrage.The news has dominated internet message boards, online news portals and state-run newspapers in China, where crimes by the offspring of the country's elite cause particular anger among ordinary people."Family education" among successful, well-known figures in China needs to be "cautious", said the People's Daily, the ruling party's official organ, in an editorial on the case."Many of these children have not experienced the hard work needed in the struggle to achieve success, but are shown the results of this success."Used to getting everything they want and having all their problems handled, they will use their father's name as an excuse, take flaunting wealth for granted and regard defying the law as brave behaviour."AssaultLi is among five suspects detained over allegations of a sexual assault on 17 February, the state-run China Daily said.The newspaper quoted an unnamed Beijing police source saying the group were accused of gang-raping a woman in a hotel room after a night of drinking.It is not the first time the 17-year-old has come to public attention.He was sent to a government correctional facility for one year in 2011 for beating a couple while their young child looked on. Domestic media reports said his parents changed his name from Li Tianyi to Li Guanfeng on his release.Hundreds of thousands of people went online to express their outrage at the time, and the general apologised for his son's actions.

Horsemeat found in Swedish meatballs

Czech authorities said on Monday they have detected horsemeat in meatballs labelled as beef and pork for Swedish furniture retailer giant Ikea, while EU officials met to discuss tougher food labelling rules to counter the developing scandal.The horsemeat was found in 1kg packs of frozen meatballs made in Sweden and shipped to the Czech Republic for sale in Ikea stores there, the State Veterinary Administration said. A total of 760kg of the meatballs were stopped from reaching the shelves.Ikea's furniture stores feature restaurants and also sell typical Swedish food, including the so-called Kottbullar meatballs.It was not immediately clear whether Ikea exported the same product to other countries. Calls seeking comment from Ikea in Sweden were not immediately returned on Monday.The Czech authority also found horsemeat in beef burgers imported from Poland during random tests of food products.Authorities across Europe have started doing random DNA checks after traces of horsemeat turned up in frozen supermarket meals such as burgers and lasagne beginning last month.The EU's agriculture ministers gathered in Brussels on Monday to discuss the widening scandal's fallout, with some member states pressing for tougher rules to regain consumer confidence.The 27-nation bloc must agree on binding origin disclosures for food product ingredients, starting with a better labelling of meat products, German Agriculture Minister Ilse Aigner said."Consumers have every right to the greatest-possible transparency," she insisted.Austria backs the German initiative; but others like Ireland say existing rules are sufficient although Europe-wide controls must be strengthened to address the problem of fraudulent labelling.The scandal has created a split between nations like Britain who see further rules as a protectionist hindrance of free trade under the bloc's single market, and those calling for tougher regulation.Processed food products - a business segment with traditionally low margins that often leads producers to hunt for the cheapest suppliers - often contain ingredients from multiple suppliers in different countries, who themselves at time subcontract production to others, making it hard to monitor every link in the production chain.Standardised DNA checks with meat suppliers and more stringent labelling rules will add costs that producers will most likely hand down to consumers, making food more expensive.The startThe scandal began in Ireland in mid-January when the country's announced the results of its first-ever DNA tests on beef products. It tested frozen beef burgers taken from store shelves and found that more than a third of brands at five supermarkets contained at least a trace of horse. The sample of one brand sold by British supermarket kingpin Tesco was more than a quarter horse.Such discoveries have spread like wildfire across Europe as governments, supermarkets, meat traders and processors began their own DNA testing of products labelled beef and have been forced to withdraw tens of millions of products from store shelves.More than a dozen nations have detected horse flesh in processed products such as factory-made burger patties, lasagnes, meat pies and meat-filled pastas. The investigations have been complicated by elaborate supply chains involving multiple cross-border middlemen.

Ikea pulls meatballs from 14 countries

Swedish furniture giant Ikea has withdrawn some of its company-branded meatballs in 14 European countries after horsemeat was found in the product by Czech authorities, the company said on Monday."We take this very seriously and have withdrawn one-kilo bags of frozen meatballs from Slovakia, the Czech Republic, Hungary, France, Britain, Portugal, Italy, the Netherlands, Belgium, Spain, Cyprus, Greece and Ireland," in addition to Sweden, said company spokesperson Ylva Magnusson.

NEWS,23. AND 24.02.2013

Italians vote in cliffhanger elections

Voting was underway in Italy's general election on Sunday, amid uncertainty about who will prevail and signs of mounting support for a radical protest party which advocates a referendum on the country's eurozone exit.Polling stations opened at 8am (07:00 GMT) and were to close at 10pm. A second day of voting takes place on Monday, from 7am to 3pm, with exit polls due immediately thereafter.A total of around 50 million Italians are eligible to vote, but analysts predict abstention rates of around 30%. Snow in northern Italy was expected to hold some voters back.According the Ministry of Interior, voter turnout stood at 14.6% by noon, down from 16.3% at the last general elections in 2008.The frontrunner in the contest is centre-left leader Pier Luigi Bersani, but his "Italy Common Good" coalition risks falling short of a majority in the upper house of parliament, the Senate.Negotiations to form a government may be complicated by the likely success of comedian Beppe Gril, whose anti-establishment Five Star Movement drew hundreds of thousands of people for its final rally on Friday in Rome.Pollsters say the movement could emerge as the third or second-largest single party in parliament. Grillo is not standing himself, but has pledged to act as the party's "spokesperson."The other main contenders are scandal-prone former premier Silvio Berlusconi, whose conservative coalition was trailing the centre-left before an opinion polls blackout came into force on February 8, and outgoing premier Mario Monti.Monti's centrist alliance is seen as the most likely coalition partner for Bersani were he not to secure a solid majority but the prospective deal is hindered by policy differences between Monti and Bersani's leftist ally, Nichi Vendola.All the leaders except Grillo had cast their vote by Sunday morning.

Britain clings to austerity

British finance minister George Osborne insisted on Saturday that he would not abandon his deficit-cutting drive after Moody's stripped the country of its coveted triple-A debt rating.The opposition lashed Osborne, saying his plan for the economy was shot through, while analysts said that although it was an embarrassment for him, the downgrade would have a limited impact in the markets.In an expected rebuff to London's hopes that sharp spending cuts would both gradually eliminate the deficit and revive growth, Moody's rating agency cut Britain's grade by one notch to Aa1 on Friday.Osborne said it was a "loud and clear message that Britain cannot let up in dealing with its debts, dealing with its problems, cannot let up in making sure that Britain can pay its way in the world."What is the message from the ratings agency? Britain's got a debt problem. I agree with that. I've been telling the country for years that we've got a debt problem, we've got to deal with it."What do they also say? That if we abandon our commitment to deal with that debt problem, then our situation would get very much worse and I'm absolutely clear that we must not do that."Asked if he had broken his commitment to protecting Britain's credit rating, he said the true test of credibility was whether Britain could borrow money."At the moment we can do that very cheaply with very low interest rates precisely because people have confidence that we have got a plan," he said.Moody's said government debt was still mounting and that growth was too weak to reverse the trend before 2016.It described the British economy as constrained both by turgid global growth and the drag from businesses and the government rapidly slashing their debt burdens.Calling it a "humiliating blow", Labour opposition finance spokesperson Ed Balls said Osborne had failed in his chief stated mission of retaining Britain's AAA status."The reality is an economy which is not growing, a deficit which is getting bigger, families in real stress and a government which is ploughing on regardless with a plan which is not working," he told BBC television."Saying 'the medicine is not working, let's increase the dose of the medicine' that is completely crazy economics."However, Howard Archer, chief UK economist at IHS Global Insight research group, said that the market had been anticipating the downgrade for some time, though Britain's pound sterling currency may be vulnerable."It does focus attention on the UK economy's extended and ongoing serious problems," he said."The loss of the AAA rating certainly puts pressure on Mr Osborne to come up with more initiatives in the (March 20) budget to try and boost growth."While an embarrassment for the government and a cause for piqued pride, we suspect that the loss of the AAA rating will have only a limited negative impact for the UK economy." Mark Littlewood, director general of the Institute of Economic Affairs free-market think-tank, said: "The damaging impact of ballooning national debt, public spending raging out of control and tax rises should not be underestimated."Taking immediate action to tackle the deficit must now be the priority. George Osborne should focus on making sufficient savings in public spending to implement a substantial programme of tax reductions."Meanwhile Howard Wheeldon, senior strategist at stockbrokers BGC Partners, said the downgrade was not a reason for an economic policy change."Any amount of manipulation by attempted false stimulation of the economy in an attempt to create 'artificial' growth would in my view make an already bad deficit problem even worse," he said."We have all lived beyond our means for far too long."If the UK deficit is to be brought down and the task of reducing the debt mountain begun, Mr Osborne has no option but to stick to his guns."We are light years away from returning to growth."

Indian tycoon donates $2bn to charity

Indian software tycoon Azim Premji said Saturday he has given $2.3bn to an education charity that he controls, reportedly the biggest charitable donation in the country's recent history.It is his second recent big donation after giving almost $2bn to the charity in 2010, and came shortly after he joined the Giving Pledge club set up by Microsoft co-founder Bill Gates and billionaire investor Warren Buffet.In Saturday's donation, the chairman of software firm Wipro transferred shares worth $2.3bn from the company to a trust which controls the education charity Azim Premji Foundation, a company statement said.The billionaire, who inherited a cooking oil company and transformed it into India's third-biggest outsourcing services firm, said the trust will use the funds to scale up the foundation's activities "significantly". The charity seeks to boost the quality of India's overstretched education system by improving teacher quality and setting up model schools.The Business Standard newspaper and other media reported it was the biggest one-off donation to charity in India in modern times.The media-shy tycoon is India's third wealthiest individual with a net worth of some $16bn, according to a 2012 Forbes rich list.Premji, whose trust funds initiatives including rural education and teacher training, has long promoted education as a way to tackle India's deep poverty.He told a recent World Economic Forum in Davos that "education is perhaps the most powerful enabler of human life and equity".A few days ago, he became the first Indian to join the Giving Pledge club, which encourages the world's wealthiest to donate at least half their fortunes to charity.Those who are "privileged to have wealth should contribute significantly to try and create a better world for the millions who are far less privileged," Premji said when joining the club.The billionaire's donation comes amid growing disquiet in India about the yawning divide between the country's burgeoning wealthy class and the hundreds of millions still living in deep poverty.A 2012 report on philanthropy by global consultancy Bain noted a "striking imbalance" in India, noting it was home to one of the world's fastest-growing wealthy populations but also one in three of the world's malnourished children.While the report noted that philanthropy was on the rise, it added there was "significant room for improvement if India is benchmarked against the US, one of the world's leaders in private giving".With Premji's latest donation, his educational charitable trust's shareholding in Wipro will go up to nearly 20%.

Horsemeat scandal: Now health fears

Horsemeat containing a drug potentially harmful to humans has likely entered the food chain, France said on Saturday, adding health concerns to the food scandal raging across Europe.A spokesperson for the French agriculture ministry told AFP several horse carcasses containing the drug Phenylbutazone have probably ended up being eaten by consumers.Phenylbutazone is an anti-inflammatory treatment for horses which is potentially harmful to humans and by law is supposed to be kept off plates.Britain alerted Paris that six tainted carcasses had been exported to France in January, but the meat had already been processed by the time the warning came.Agriculture Minister Stephane Le Foll said that although some of the meat had been recalled, the equivalent of three carcasses had "probably" made it to consumers, but added there was "no health risk" since the traces of phenylbutazone found in the meat were "extremely weak".The minister underscored that the find was in no way connected with the wider horsemeat scandal however, since the meat had not been disguised as beef.But the announcement still added a new dimension to the scandal over mislabelled meat that erupted in Europe in January after horsemeat was initially found in so-called beef ready-made meals and burgers in Britain and Ireland. Since then, supermarkets across the continent have pulled prepared meals from their shelves, with effects felt as far away as Hong Kong, where an imported brand of lasagne has been withdrawn from stores. On Saturday, Italy joined the long list of countries that have been hit by the fraud, reporting its first case of horsemeat-contaminated lasagne. The horsemeat was found in tests on six tons of mincemeat and 2 400 "lasagne bolognese" packages produced by a central Italian company that had used meat from suppliers based in the northern part of the country.The tests were carried out as part of sweeping checks by police on 121 brands across the country.French President Francois Hollande said on Saturday that he would push for mandatory labelling of meat in ready-made meals."I want there to eventually be mandatory labels on the meat contained in prepared meals," Hollande said while visiting an agricultural show in Paris."Until then, I will support... all initiatives for voluntary labelling" so that "consumers know the origin of the products they are consuming, especially meat".French firm Spanghero has been at the heart of the scandal after it allegedly passed off 750 tons of horsemeat as beef, with the product eventually finding its way into 4.5 million "beef" products sold across Europe.French authorities had initially suspended the company's sanitary license, but following protests from 300-odd workers allowed the company to resume production of minced meat, sausages and ready-to-eat meals.The company was banned, however, from stocking frozen meat.In Ireland, authorities on Friday suspended production at a meat processing plant after investigators found it was selling horsemeat labelled as beef.B&F Meats, a small company licenced to debone beef and horsemeat in Carrick-on-Suir in County Tipperary, was found to be sending horsemeat to a customer in the Czech Republic, the Irish agriculture ministry said in a statement.The label in the Czech language refers to beef, it added.

North Korea ups readiness, tensions

North Korean leader Kim Jong-Un has overseen a military drill, state media said on Saturday, his third such inspection in as many days as tensions run high following Pyongyang's third nuclear test.Accompanied by top military commanders, Kim watched a flight exercise and a paratrooping drill by the Korean People's Army, the Korean Central News Agency (KCNA) said."He called on the KPA service personnel to put spurs to making preparations for going into action, keeping themselves at maximum alert at all times."Once the enemies make a provocation, you should give full play to the inexhaustible combat capability to deal deadly blows at them ... and blow up their strongholds of aggression," he was quoted as saying by KCNA.The state news agency did not to give the date of the visit but it was believed Kim's latest trip was on Friday.KCNA said on Friday Kim had also inspected a tactical attack exercise combined with live shell firing.On Thursday, KCNA reported he had visited KPA Unit 323, which is believed to be an anti-air missile unit.North Korea on 12 February carried out its third nuclear test in seven years in what it says was a riposte to the US hostility shown in the widening of existing UN sanctions following its satellite launch in December last year.World powers on the UN Security Council united to condemn the nuclear test, and the US led calls for tougher sanctions.But Pyongyang has threatened still stronger action, defying warnings of United Nations measures.North Korea is already under international sanctions for conducting two nuclear tests in 2006 and 2009, which both came after long-range rocket launches.

Hundreds pray for Hugo Chavez

Hundreds of Venezuelans held a candlelight vigil Friday for President Hugo Chavez, praying for their leader while he remained in a hospital undergoing cancer treatment.Chavez's supporters gathered on a wide stairway in a hillside park near the presidential palace. They lit candles at sunset and sang along with a recording of a healthy Chavez belting out the national anthem.Some wiped away tears. Others closed their eyes and prayed.Some said they felt sad, yet still hopeful that Chavez might be able to survive."We're praying for the president, for him to get through all of this," said Ana Perez, a seamstress holding a candle and shielding her flame from the breeze with a piece of paper.Her eyes filled with tears as she talked about Chavez. "There is no other president like this one. He's unique," she said, wiping a wet cheek."He's going to come out of all of this, and he's going to get better," Perez said. "He's survived many hard things. He's strong."A group of indigenous people wearing colourful dresses, beads and feathers danced around a bonfire at the base of the stairs. One man blew on a conch shell, while others shook maracas as they danced around the flames.Chavez hasn't been seen since he returned to Venezuela on Monday from Cuba, where for 10 weeks he was recovering and fighting complications following his latest cancer surgery on 11 December.Vice President Nicolas Maduro said on Friday night that he and other officials had met with Chavez at the military hospital. Maduro said Chavez is continuing to undergo treatment for "respiratory insufficiency" and is breathing through a tracheal tube, which hinders speech."He communicated with us through various written ways to give us his guidance," Maduro said, speaking on television alongside other aides at the hospital. Maduro said Chavez was smiling and in an energetic mood, "with an immense strength of will."He said they talked with Chavez in three sessions lasting about five hours. "We came out filled with his strength," Maduro said.During the vigil, some in the crowd held photos of Chavez while a preacher spoke from a stage, saying: "The president is going to be healthy!"Lissette Cordero, who stood holding a candle next to her 5-year-old son, said she's grateful to Chavez for creating government-funded neighbourhood councils and inexpensive state-run food stores.Her son, who also held a candle, looked up at the stage where the minister was speaking and asked, "Is that Chavez?""No," his mother replied with a smile."I have faith he's going to recover. It's hard," she added. "I love him."The government has not given details about the treatment Chavez is undergoing, and hasn't identified the type or exact location of the tumours that have been removed from his pelvic region.Venezuela's opposition has demanded the government provide more specific information about Chavez's condition, and has criticized a decision by lawmakers last month that indefinitely postponed his swearing-in ceremony for a new six-year term.Two prominent Venezuelan jurists asked the Supreme Court on Thursday to determine whether Chavez is fit to remain in office. Former Supreme Court President Cecilia Sosa Gomez and professor Jose Vicente Haro called for the court to appoint a board of medical experts to determine whether Chavez is in physical and mental shape to remain president.They argued that if Chavez is fit to be president, the court should proceed to hold a public swearing-in.Government officials insist Chavez remains in charge and has been communicating with government officials about policy decisions and signing documents.Foreign Minister Elias Jaua read a lengthy letter from Chavez on Friday to a gathering of African and South American leaders in Equatorial Guinea.In the letter, which ran for about 1, 00 words, Chavez said he was sorry not to be able to attend the meeting. Chavez denounced Western military intervention in countries such as Libya in recent years, and called for more "South-South co-operation."The letter ended with the words: "We will live and be triumphant!"Prayer gatherings for Chavez this week have included a ceremony where indigenous shamans danced on Thursday, attended by Guatemalan indigenous activist Rigoberta Menchu.Menchu, who received the 1992 Nobel Peace Prize, said she had come to Venezuela "as one of the Maya spiritual guides" with knowledge of medicinal traditions."I'm completely sure that President Hugo Chavez has received the cosmic energies. He has received the strength of our Mother Earth. ... He is going to overcome big obstacles," Menchu said Friday at a televised event where she spoke alongside Maduro.As for Chavez, she said, "He has to have sufficient rest so that he can recover the strength of his vital energies as soon as possible."

NEWS,22.02.2013

Ultra-cheap eurozone loans hit a snag

 

Eurozone banks do not seem ready to repay as much as expected of the ultra-cheap three-year loans made available to them by the European Central Bank last year, official data showed on Friday.The ECB announced that 356 eurozone banks have signalled their intention to repay early €61.1bn ($80.5bn) of a second batch of special long-term refinancing operations or LTROs, launched last year to avert a looming credit crunch in the single currency area.That is much lower than the €130bn some analysts had been expecting.The LTROs are injections of liquidity into the banking system with ultra-long maturities of three years.They were launched in two batches - €468.19bn in December 2011 and €529.5bn in February 2012.At the time, they were widely credited with pulling Europe back from the brink of a dangerous credit crunch.Both rounds of LTRO included provisions to allow early repayment after one year, if banks so chose.The first repayment window opened on January 30, when 278 banks repaid €137bn.And the second window opens on February 27.After that, repayments can continue on a weekly basis, depending on demand.Total repayments so far amount to €212.3bn or 21% of the combined total of €1.02 trillion in LTROs.ECB chief Mario Draghi has argued that the fact that eurozone banks are ready to repay early such a large chunk of their emergency loans "reflects the improvement in financial market confidence."But analysts suggested the lower-than-expected repayments for the second batch is a signal that banks are still not ready to rely solely on the normal funding markets, especially with the Italian elections looming this weekend."The uncertainty ahead of the general political elections in Italy could have led some banks that had decided to exit to postpone their repayment," said Giuseppe Maraffino and Laurent Fransolet of Barclays Research."Should this have been the case, the repayment in the following weeks could be higher than at the previous three paybacks in the weeks following the January 30 payback, which averaged €4.1bn," the analysts said.The ECB did not provide a national breakdown of banks that are repaying and few banks have made public their repayment plans.

Spain approves urgent job refoRms

The Spanish government has approved a package of urgent reforms it hopes will create jobs for young people and help slash the country's 26% unemployment rate. The measures approved on Friday include scrapping company social security payments for a year for young people as long as the company takes on long-term unemployed people aged over 45.Other measures include limiting monthly social security payments to €50 for six months for under 30s setting up their own businesses and the possibility of allowing people to use lump sum unemployment payments to start a company.Some 6 million people have lost their job since the economy went into freefall with the collapse of the real estate sector in 2008. The unemployment rate for people under 25 is a staggering 55%.

US youth now more credit savvy – study

The recession had a strong impact on young Americans who saw the credit crisis up close: they are taking on less credit card debt, delaying plans to buy homes and owning fewer cars, according to a study released on Thursday.From 2007 to 2010, the median debt of US households headed by people aged 35 and younger fell by 29% - from $21 912 to $15 473 - while debt of older Americans fell by just 8%, to $30 070, according to a Pew Research Center study titled "Young Adults After the Recession."Residential property accounts for at least three-quarters of average American debt, so much of the drop may be connected to a decrease in home ownership. The number of Americans under 35 who own their primary residence dropped to 34% in 2011 from 40% in 2007, Pew said.Meanwhile, the percentage of homeowners over age 35 fell by 2 percentage points to 72%."As younger people invest in education and wait longer to enter the workforce or start families, that may mean they will wait longer to buy homes," said Richard Fry, a senior economist at Washington-based Pew and the author of the study.Young adults are cutting back on credit card usage as well. Young households with credit card debt fell by 10 percentage points to 39% between 2007 and 2010.Car ownership is an area in which younger Americans also cut back. The number of households led by adults under 35 with auto debt fell by 12% between 2007 and 2010. The typical outstanding car loan fell to $10 000 from $13 000.As unemployment drove many young people to return to school, student debt increased during the recession. By 2010, 40% of households headed by young adults had student debt, up from 34% in 2007 and 26% in 2001.Squeezed by increasing student debt, younger Americans are cutting debt in other areas. Their median level of debt fell to $15 473 in 2010 from $17 938 in 2010, according to the study.

Iran 'installing new nuclear equipment'

World powers condemned Iran just days before talks on its controversial nuclear programme, after an International Atomic Energy Agency (IAEA) report said it had begun installing advanced equipment at one of its main nuclear plants."On 6 February 2013, the Agency observed that Iran had started the installation of IR-2m centrifuges" at the Natanz plant, the IAEA report said."This is the first time that centrifuges more advanced than the IR-1 have been installed" at the plant in central Iran, the UN atomic watchdog added.One official said Iran intended to install around 3 000 of the new centrifuges at Natanz enabling it to speed up the enrichment of uranium.This process is at the heart of the international community's concerns about Iran's nuclear programme, since highly enriched uranium can be used in a nuclear weapon.The US State Department denounced the development as "yet another provocative step" by Iran and White House spokesperson Jay Carney warned Tehran it had a choice. "If it fails to address the concerns of the international community, it will face more pressure and become increasingly isolated," he said on Thursday."The burden of sanctions could be eased, but the onus is on Iran to turn its stated readiness to negotiate, into tangible action."Britain expressed "serious concern".Israel, the Middle East's sole if undeclared nuclear-armed state, warned that Tehran was "closer than ever" to achieving the amount of enriched uranium to make a nuclear bomb.The report was "severe" and "proves Iran is continuing to rapidly advance to the red line" that Prime Minister Benjamin Netanyahu has said the international community must draw to prevent Iran obtaining an atomic weapon, Netanyahu's office said.Israel has refused to rule out bombing Iran's nuclear facilities. Despite the developments at Natanz, the IAEA's quarterly report seen by AFP also noted that Iran had not started operating any new equipment at its Fordo plant.Fordo is of more concern to the international community, since it is used to enrich uranium to fissile purities of 20%: At Natanz it is mostly to 5%.The ability to enrich to 20% is technically speaking considerably closer to 90%, the level needed for a nuclear weapon.Iran has so far produced 280kg of 20% uranium, of which around 110kg have been diverted to fuel production, the new report said.Experts say that around 250kg are needed for one bomb, although creating a weapon requires several other steps and if Iran were to start further enriching to weapons-grade this would be detected by the IAEA.Iran denies seeking atomic weapons but many in the international community suspect otherwise, The UN Security Council has passed several resolutions calling on Iran to suspend all uranium enrichment.The IAEA report came ahead of a new meeting between Iran and six world powers - the US, China, Russia, Britain, France and Germany - in Kazakhstan on 26 February.These will be the first talks between the parties since three rounds of meetings ended in stalemate in Moscow last June.The so-called P5+1 called on Iran to suspend all 20% enrichment, shut down Fordo and export its 20% stockpile.But they stopped short of offering Tehran substantial relief from UN Security Council and unilateral Western sanctions that last year began to cause major economic problems for the Gulf country.A Western diplomat said Wednesday that the P5+1 would come to Almaty with an offer containing "significant new elements".Reports have said that the powers could ease sanctions on Iran's trade in gold and other precious metals.On Thursday, US State Department spokesperson Victoria Nuland urged Iran to consider "another path" than the nuclear bomb."They have an opportunity to come to those talks ready to be serious, ready to allay the international community's concerns, and we hope they take that opportunity," she said.Parallel efforts by the IAEA dating back more than a year to press Iran to grant it access to sites, documents and scientists involved in what the agency suspects were past efforts to develop nuclear weapons remain stalled.The new report said that although the IAEA board had adopted two resolutions on the urgent need to resolve these issues with Iran, they had not been able to reach agreement with Tehran on the way forward.It added however that the Vienna-based IAEA's "commitment to continued dialogue is unwavering".

Mexico vigilantes challenge government

Fed up with the police's failure to curb crime, armed vigilante groups have spread to at least four Mexican states, manning checkpoints, patrolling streets and in one case killing a "suspect" in a shootout.The proliferation of self-policing poses a challenge to the government of President Enrique Pena Nieto, who inherited a drug war that had killed about 70 000 people in six years when he took office in December.Raul Plascencia Villanueva, head of the National Human Rights Commission, said the vigilante trend must be rejected, warning that there is "a very fine line between self-defence organisations and paramilitary groups".Although self-defence groups have long existed in Mexico, they began to expand last month, when hundreds of men donned masks and took up machetes and hunting rifles in the rural mountains of the southwestern Guerrero state.In recent weeks, more groups have emerged in the neighbouring state of Michoacan, the southern state of Oaxaca and the central state of Mexico, which surrounds Mexico City.In Guerrero, the civilians decided to police their own streets after a community leader was kidnapped in early January.The vigilantes say the local police are too corrupt, unwilling or unable to stop drug gangs - a charge often levelled against police in Mexico.The vigilantes detained 53 people, accusing them of a slew of crimes from murder to kidnapping and extortion, and held them in makeshift jails in remote villages.They handed the last of their detainees to authorities this week after long negotiations, but the self-policing took a deadly turn on Wednesday. Crisoforo Garcia, a leader of the vigilante movement, said a squad was on a "routine patrol" in the mountain village of El Refugio when it was attacked by a group of armed men, one of whom was killed in the resulting gunfight.Interior Minister Miguel Angel Osorio Chong met with leaders of the Guerrero vigilante movement, agreeing to find a way to make the community police forces legal in return for the handover of 31 suspects Gerardo Rodriguez, a security expert and director of the Mexico Seguridad consultancy, said it was a "dangerous" deal, because giving legitimacy to these groups "shows the Mexican state's inability at the federal and local level to bring security and justice to these towns""It is a new flashpoint of insecurity for the Mexican state that can escalate," Rodriguez said. Community police forces that are tolerated by the authorities have existed in Guerrero since 1995, allowing indigenous groups to mete out justice according to their own traditions. But the vigilantes who have taken up arms in recent weeks were outside this local system, in which prisoners face public justice and sentences that include years of hard labour in various towns.The growth of vigilante squads has sparked a debate among politicians, with some pointing fingers at state governors and other saying federal policymakers should do more to help."It is a governability crisis, because it demonstrates the total absence of the police," said Senator Ernesto Cordero, a leading member of the opposition National Action Party.Manlio Fabio Beltrones, the leader of the ruling Institutional Revolutionary Party (PRI) in the lower house of Congress, said governors should "reconsider the way their governments work" if they "are not capable enough to offer protection, safety and justice" to their populations.Guerrero's leftist Governor Angel Aguirre said federal lawmakers should provide more resources to state governments to improve security. Fausto Vallejo, the PRI governor of Michoacan, suggested that the community police forces should be legalised and given training and equipment.Pena Nieto has vowed to shift the focus of the drug war towards reducing the daily violence plaguing much of the country. He wants to form a paramilitary "gendarmerie" to replace the thousands of troops deployed by his predecessor since 2006.But the government has said soldiers will remain deployed until the level of violence falls.